The US government has filed a lawsuit against Wells Fargo bank for mortgage fraud.

The suit alleges that the bank lied about the quality of mortgages it handled leading to huge losses for the government when the loans went bad.

It is seeking damages for hundreds of millions of dollars in insurance claims already paid to Wells Fargo by the Federal Housing Administration (FHA).

Wells Fargo has denied the allegations.

The civil complaint has been submitted by the US Attorney in Manhattan.

Wells Fargo, which is the biggest mortgage lender in the US, is alleged to have misrepresented the quality of loans in order to qualify for loan insurance from the FHA.

The insurance meant that when the loans went bad, the bank could ask the government agency to cover their losses.

"As the complaint alleges, yet another major bank has engaged in a longstanding and reckless trifecta of deficient training, deficient underwriting and deficient disclosure, all while relying on the convenient backstop of government insurance," said Manhattan US Attorney Preet Bharara.